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US stocks surged on Tuesday, with the Dow Jones Industrial Average scaling the highest level since 2007, after data showed that retail sales increased by the most in five months and as JPMorgan Chase announced it will raise its dividend.

The Dow Jones jumped 218 points, or 1.68%, to close at 13,178. The Standard & Poor's 500 Index rose 25 points, or 1.81%, to 1,396 - a level not seen since June 2008. The Nasdaq Composite Index climbed 56 points, or 1.88%, to 3,040.

Shares rallied helped by stronger-than-expected retail sales in February. Adding to the positive sentiment, the Federal Reserve released results from its latest stress tests of banks in which most of the top lenders did well and their shares extended gains in trading after the closing bell. The US central bank also said that recent strains on financial markets were easing.

In Europe, finance ministers gave final go ahead to a second bailout for Greece, and a German index of analysts' and investors' sentiment rose much more than expected in March.

Banks led the rally, with JP Morgan Chase surging 7% after the bank said it will raise its dividend and unveiled a $15 billion stock-buyback programme, with as much as $12 billion authorised for repurchase this year. Bank of America jumped 6.3% while Goldman Sachs rallied 6.5%.

However, Citigroup and SunTrust fell after they fared the worst under the Fed’s supervisory stress ratios. Citigroup shares declined 2.2% in late trading while SunTrust slid 3%. MetLife plunged 3.3%.

Apple rose 2.9% after Jefferies Group raised its share-price estimate to $699. FactSet Research Systems advanced 8.6% after the financial-data supplier reported second-quarter profit and sales that exceeded analysts’ estimates.

Despite the upbeat retail data, shares of Urban Outfitters fell 5.3% a day after it said it expects margins to continue to be pressured.

In Asia, equities gained on Wednesday in morning session amid upbeat US retail sales data and as the Fed raised its assessment of the world’s biggest economy, boosting the earnings outlook for Asian exporters.

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